Claims Made. Occurrence Based. Circumstances which could give rise to a claim. These terms are insurance jargon. And if you want to understand how medical indemnity insurance policies operate, you need to be familiar with these terms. So, what do they mean?
Occurrence Based versus Claims Made policies
An occurrence based policy is the most common type of insurance policy. Car insurance, home & contents insurance and public liability insurance are all occurrence-based policies.
With these types of policies, the date of the incident is key to determining insurance cover. For example, say your car was rear-ended on 1 October 2016. You would lodge a claim with whichever company insured your car on the date of the incident ie. 1 October 2016. Simple.
Claims made policies are more complicated. Under a claims made policy, the date of the incident is not the key date for determining insurance cover. Rather, the key date is when an insured becomes aware of an actual or potential claim against them.
All medical indemnity insurance policies in Australia are claims made policies. This means a medical indemnity insurance policy is triggered when:
- a claim against a doctor is made, or
- when a doctor first becomes aware of the possibility of a claim against him/her,
not when the doctor provides the medical services.
For example, say Dr B, an orthopaedic surgeon, operated on a patient on 1 October 2016. On 15 March 2018, Dr B receives a letter from the patient’s lawyers. The letter states that since the surgery, the patient has numbness and pain running down the side of his leg, making him unable to work. Dr B believed the patient’s surgery and recovery have gone smoothly. It is only when Dr B receives the lawyers’ letter that she becomes aware there is an issue with the surgery.
In this situation, Dr B must notify her medical indemnity insurer on risk on 15 March 2018, not the insurer on risk at the time of the surgery in October 2016.
Claims versus Circumstances
Under medical indemnity insurance policies, doctors are obliged to notify their insurer of:
- any actual claim, and/or
- any circumstances which could give rise to a claim (perhaps more easily thought of as a potential claim) against him/her.
What do these terms mean? And what’s the difference between them?
The exact definition of a ‘claim’ will be specified in the wording of your medical indemnity insurance policy. Generally speaking:
- the issuing of court proceedings, and/or
- anything in writing which suggests a patient will be seeking compensation due to dissatisfaction with medical services provided,
will amount to a claim.
A circumstance is a matter which could give rise to a claim against a doctor, or which a doctor should reasonably have known could give rise to a claim. For example, any complaint by a patient to their doctor about the medical services provided – whether a phone call, letter, or comment in a consultation – may amount to a circumstance which should be notified to the doctor’s medical indemnity insurer.
If in doubt, it’s always better to err on the side of caution and notify your medical indemnity insurer of matters which you think may amount to a ‘circumstance’.
The terms explained in this blog post are the building blocks on which medical indemnity insurance policies are built.
It’s essential to be familiar with these terms in order to understand more complicated aspects of medical indemnity insurance, such as retroactive (or ‘tail’) cover, continuous cover and indemnity limits. Look out for future blog posts in which we’ll discuss these topics.
In the meantime, if you have any questions, please feel free to contact me.